The rise of the construction sector outperformed the market this week. In December, infrastructure investment recovered, real estate investment continued to decline, construction fell, completion improved, and real estate sales decreased year-on-year. The Ministry of housing and urban rural development issued the 14th five year plan for the development of construction industry to help the development of prefabricated buildings.
The overall rise of construction outperformed the market, and the segments generally rose: this week, the Shenwan construction index closed at 2345.0 points, up 7.9% month on week, outperforming the market. The industry’s average price to book ratio was 1.0 times, slightly higher than that of last week. Segments generally rose, with civil construction rising by 1.9%, the largest increase; Decoration rose by 1.4%, the smallest increase.
The Ministry of housing and urban rural development issued the 14th five year plan for the development of construction industry to help the development of prefabricated buildings: Recently, the official website of the Ministry of housing and urban rural development issued the 14th five year plan for the development of construction industry to clarify the strategic direction of the development of construction industry during the 14th Five Year Plan period. According to the plan, by 2035, the development quality and efficiency of the construction industry will be greatly improved, the construction industrialization will be fully realized, the construction quality will be significantly improved, the overall advantages of the industry will be significantly enhanced, and the construction industry will become a world power in intelligent construction. Aiming at the long-term goal of 2035, the framework of high-quality development system of construction industry should be initially formed during the “14th five year plan” period, the level of construction industrialization, digitization and intellectualization should be greatly improved, the green transformation of construction mode has achieved remarkable results, and the transformation of construction industry from large to strong should be accelerated. The plan puts forward seven main tasks, covering all aspects of the construction industry. Among them, prefabricated construction and BIM Technology are the key development directions of the construction industry during the 14th Five Year Plan period. The general contracting mode of construction engineering and the whole process engineering consulting service mode are also the key development modes of construction engineering. Driven by the transformation of building industrialization and the 3060 double carbon target, it is expected that China’s prefabricated buildings will usher in rapid development during the 14th Five Year Plan period.
Infrastructure investment rebounded year-on-year, and real estate investment continued to decline year-on-year: in December, fixed asset investment was 7.0 trillion, an increase of 2.0%, of which the completed investment in infrastructure and real estate development was 1.9 trillion and 1.0 trillion respectively, with a year-on-year growth rate of 3.8% and – 13.9% respectively. Compared with November, infrastructure investment picked up in December, and real estate investment fell further. In infrastructure construction, the investment in power, transportation and public utilities was 0.42 trillion yuan, 0.59 trillion yuan and 0.88 trillion yuan respectively, with a year-on-year growth rate of 8.1%, 7.1% and – 0.3% respectively. The year-on-year growth of electric power and transportation is relatively large, and the year-on-year decline of public water conservancy investment is also significantly reduced compared with November. The central economic work conference in 2021 called for “accelerating the preliminary work and construction progress of major water conservancy projects” and the recent release of the comprehensive transportation plan for the 14th five year plan in many regions. The total investment has been significantly increased compared with the 13th five year plan. It is expected that there will be a large development space for transportation, water conservancy and other subdivisions in 2022.
Construction continued to decline, completion increased year-on-year, and the land transaction area decreased significantly year-on-year: in December, the planned land transaction area in 100 large and medium-sized cities totaled 150 million square meters, with a decrease of 55.8%, and the average transaction floor price was 3138 yuan / square meter. The construction, completion and sales areas were 160, 330 and 210 million square meters respectively, with year-on-year growth rates of – 31.2%, 1.9% and – 15.6% respectively. In December, the land transaction and supply area decreased significantly, the average transaction floor price increased, and the unit price of listed floor decreased; The new construction data decreased compared with the same period last year, and the completion data increased year-on-year. Due to the demand for payment collection of real estate enterprises at the end of the year, the completion data performed well and the new construction data was slightly weak. However, with the development of infrastructure investment and the signs of marginal policy easing in the real estate industry, we believe that the new construction data may improve.
Key recommendation
Key recommendation: infrastructure sector, Shenzhen Capol International&Associatesco.Ltd(002949)
Main risks of rating
Risk tip: manufacturing investment slowed down, the promotion of prefabricated buildings was less than expected, and macro liquidity tightened.
